Chips could prevent Euro fraud

Future generations of euro notes could have computer chips in them which would allow police to track stolen money and stop counterfeiters, it has been claimed.

The European Central Bank is said to be looking at the idea as a way of foiling criminals. The euro already incorporates hi-tech security features, including holograms and special inks, which make it one of the best protected currencies in the world.

There are also further secret security measures known only to bankers and police. An ECB spokesman refused to comment today on whether computer chips were being considered for future euro notes.

But experts say inserting radio frequency identification (RFID) chips into notes is technically possible.The technology is not currently used because of the cost - the chips can cost up to 50p each - and suggestions it might not stand up to the battering it would get if inserted in money.

However, the large value of the 500 and 200 euro notes and their attractiveness to criminals could make the incorporation of the chips economically viable.In theory, kidnappers and bank robbers would no longer be able to demand large "unmarked" bills because police would be able to follow the money through transactions.

The technology is already being used in "smart" airline luggage tags, library books and consumer packaging.Notes would be fitted with the chip and an antenna which would transmit radio signals when passing through reader equipment.It would mean police would be able to trace when and where each note had been used, in the same way as a credit card.